D.C. Domicile Strives For Flexibility

Washington, D.C., which enacted captive legislation in 2001, has set its sights on becoming one of the top domiciles worldwide, according to its new captive director.

William P. White had been serving as director of captive insurance with the Department of Insurance and Securities Regulation in Washington, D.C. for about six weeks when he revealed his plans to National Underwriter in late July. He said, ultimately, he plans for the domicile to be “regarded at the same level that you would regard Vermont, or Bermuda for that matter.”

He said it is “entirely possible to have D.C. regarded as a top-notch domicile for captives, and that is not taking anything away from the other domiciles.”

He said he would like the domicile to have a reputation for “being flexible within our responsibility as regulators.” That flexibility would be based on understanding clients business needs, he said.

Christopher L. Kramer, vice president of alternative risk management with Neace Lukens in Beachwood, Ohio, recently visited Washington, D.C. when seeking a domicile for a client, reporting that he was “pleasantly surprised.”

“I found that the statutes are very flexible and that access to regulators was relatively easy,” he said. But they are “no less demanding” than regulators in other domiciles “in terms of scrutinizing applications.” Washington, D.C., he predicted, holds “great promise for association captives, balanced with agency captives and rental captives.”

Mr. White said that Lawrence Mirel, the insurance commissioner for Washington, D.C., has given him “a great deal of latitude to deal directly with the applicants.” Mr. White added that his own personal approach “is to not get caught up in the bureaucracy of putting the captive insurance companies together.” Rather, he focuses on the motivating factors behind a captive, on understanding the applicant's overall strategy and making sure this coincides with regulatory requirements.

“I am going to take a very hands-on approach. Consequently, if you want to talk about captives, you need to talk to me as the director,” he said.

Mr. White also said his approach is tempered by his background as an underwriter. “I look at this as developing a good underwriting portfolio of captives.”

He added that if he doesn't think an organizations approach for a captive is solid, “we're not going to push forward on it just because we want a captive.”

In many instances, he said, prospective clients don't yet have a consultant and are “bouncing off ideas.” At the other end of the spectrum are those more familiar with captives, “trying to think out loud about what direction they want to go with that particular risk financing mechanism. They are trying to decide if the way they're putting it together would make sense and pass muster in D.C.”

Mr. White said he is supported by the rest of the department and is currently building a specialty staff from within. He expects to add staff with the growth of the department, he said.

The domicile so far has licensed about 10 captive insurance companies.

Interested organizations so far have been from both D.C. and outside the area. “I've only been able to field a few phone calls in the past few weeks,” he said. “I've spent the better part of my time reviewing the existing process so that we can make changes to make it more efficient.”

Inquiries about captives don't fall into any specific industry or category but are “across the board.” He said that hes seen inquiries from those segments of the market under the greatest pressure from hard market conditionsmedical malpractice and related areas like nursing home associations and doctors groupsas well as some for agency captives.

Those inquiries are also about everything from “explain to me how a captive can be beneficial to I'm having trouble, specifically with this area of the marketplace in terms of pricing or terms and conditions and as a group we have decided to form this captive,” he noted.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 18, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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D.C. Domicile Strives For Flexibility

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